JAYANTILAL K JAIN, MUMBAI V. ITO 19(3)(2), MUMBAI

ITA 1125/MUM/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9695 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: J
• Assessment Year: 2011-2012
• Appeal Filed On: 25-02-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ANJU GARODIA
• Keywords: Capital asset; Cost of acquisition
• Section: 143(3); 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH J, MUM BAI BEFORE SHRI RAJENDRA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO. 1125/MUM/2015 (ASSESSMENT YEAR- 2011-12) JAYANTILAL K. JAIN 1101, PEARL HERITAGE, DAWOOD BAUG LANE, J.P. ROAD, ANDHERI (WEST), MUMBAI-400058. PAN: AADPJ9239P VS. ITO 19(3)(2), PIRAMAL CHAMBERS, LALBAUG, MUMBAI-400012 (APPELLANT) (RESPONDENT) ASSESSEE BY : SH HERO RAI ADVOCAT E REVENUE BY : MS. ANJU GARODIA (DR) DATE OF HEARING : 26.07.2017 DATE OF PRONOUNCEMENT : 31.07.2017 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER: 1. THIS APPEAL BY ASSESSEE UNDER 253 OF THE ACT (ACT ) IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)-33, MUMBAI DATED 30.01.2015 FOR AY 2011-12. THE SOLE GROUND OF APPEAL RAISED BY ASSESSEE RELATES TO CONF IRMING THE TREATMENT OF CAPITAL GAIN ARISING OUT OF SALE OF SHOP AS SHORT T ERM CAPITAL GAIN (STCG) AND IN DENYING THE EXEMPTION UNDER SECTION 54 OF TH E ACT. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND DERIVING ITS INCOME FROM BUSINESS, OTHER SOURCES AND CAPITAL GAI N, FILED HIS RETURN OF INCOME FOR RELEVANT AY ON 20.07.2011. THE ASSESSMEN T WAS COMPLETED ON ITA N O.1125/M/2015- JAYANTILAL K. JAIN 2 25.11.2013 UNDER SECTION 143(3) OF THE ACT. THE ASS ESSING OFFICER WHILE FRAMING THE ASSESSMENT ORDER DENIED THE BENEFIT OF LTCG CLAIMED. THE ASSESSING OFFICER TREATED THE LTCG AS STCG. AFTER D EDUCTING THE COST OF ACQUISITION, THE STCG OF RS. 77,66,743/- WAS CALCUL ATED AND WAS BROUGHT TO TAX. ON APPEAL BEFORE THE LD. CIT(A), THE ACTION O F AO WAS CONFIRMED. THUS, FURTHER AGGRIEVED BY THE ORDER OF LD. CIT(A), THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. 3. WE HAVE HEARD THE LD. COUNSEL / AUTHORIZED REPRESEN TATIVE (AR) OF THE ASSESSEE AND LD. DEPARTMENTAL REPRESENTATIVE (DR) F OR THE REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. A R OF THE ASSESSEE ARGUED THAT ASSESSEE ACQUIRED THE TENANCY IN THE PROPERTY IN THE YEAR 1998. THE TENANCY RIGHT OF THE ASSESSEE WAS CONVERTED INTO OW NERSHIP ON 06.05.2010 ON PAYMENT OF LUMP SUM CONSIDERATION OF RS. 9,11,00 0/-. THUS, THE ASSESSEE IS ENTITLED FOR LTCG ON THE ASSET. IN SUPPORT OF HI S SUBMISSION, THE LD. AR OF THE ASSESSEE RELIED UPON THE DECISION OF HONBLE AL LAHABAD HIGH COURT IN CIT VS. SMT. RAMA RANI KALIA (2013) 358 ITR 499 (AL L) AND DECISIONS OF TRIBUNAL IN (I) MRS. TAUQEER FATEMA RIZVI VS. ITO I N ITA NO. 8862/MUM/2011 DATED 02.05.2014,(II) LATE MULYA B. D AS VS. ITO IN ITA NO. 2628/MUM/12 DATED 30.04. 2014 (2014) 40 CCH 017 3 (MUM. TRIB.), (III) MR. AJIT M. PENDURKAR VS. ITO IN ITA NO. 322 5/MUM/2009 DATED 19.12.2012. ON THE OTHER HAND, LD. DR FOR THE REVEN UE SUPPORTED THE ORDER ITA N O.1125/M/2015- JAYANTILAL K. JAIN 3 OF AUTHORITIES BELOW. IT WAS FURTHER ARGUED THAT TH E ASSESSEE ACQUIRED THE CAPITAL ASSET ONLY ON 06.05.2010 AND WAS NOT QUALIF IED FOR LTCG. IT WAS ARGUED THAT CASE LAW RELIED BY LD. DR FOR REVENUE A RE DISTINGUISHABLE ON THE FACTS. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW AND THE VAR IOUS DECISION CITED BY LD. AR OF THE ASSESSEE. IN THE RETURN OF INCOME, THE AS SESSEE CLAIMED CAPITAL GAIN OF RS. 88,00,000/- ON SALE OF SHOP SITUATED AT TURNER ROAD, BANDRA. THE ASSESSING OFFICER ASSESSEE WAS ASKED TO SUBSTAN TIATE THE CLAIM OF LTCG. THE ASSESSEE FURNISHED THE DETAILED, WHEREIN THE AS SESSEE CONTENDED THAT HE WAS TENANT IN THE SAID SHOP VIDE AGREEMENT DATED 16 .01.1998 UNDER MR. MANECK GIDWANI. THE ASSESSEE PURCHASED THE SAID SHO P VIDE AGREEMENT DATED 06.05.2010 FORM THE OWNER FOR A CONSIDERATIO N OF RS. 9,11,000/- BY REGISTERED AGREEMENT. THUS, THE ASSESSEES TENANCY RIGHT ACQUIRED ON 16.01.1998 WAS CONVERTED INTO OWNERSHIP RIGHT OF A LUMP SUM CONSIDERATION OF RS. 9,11,000/-. THE ASSESSEE SOLD THE SAID SHOP ON 12.10.2010 FOR A CONSIDERATION OF RS. 88,00,000/-. THE CONTENTION OF ASSESSEE WAS NOT ACCEPTED BY AO HOLDING THAT THE AS SESSEE ACQUIRED THE SHOP VIDE AGREEMENT DATED 06.05.2010 AND SOLD VIDE AGREEMENT DATED 12.10.2010, THE CAPITAL ASSET WAS HELD BY ASSESSEE ONLY FOR FIVE MONTHS. THUS, THE AO DENIED THE LTCG AND TREATED THE SAME A S STCG. AFTER ITA N O.1125/M/2015- JAYANTILAL K. JAIN 4 DEDUCTING THE COST OF ACQUISITION, THE STCG OF RS. 77,66,743/- WAS CALCULATED AND WAS BROUGHT TO TAX. THE LD CIT(A) CO NFIRMED THE ACTION OF THE AO HOLDING THAT THE ASSESSEE HAD TAKEN THE PROP ERTY IN QUESTION ON A MONTHLY RENT VIDE AGREEMENT DATED 16/01/1998 FORM L ANDLORD MANECK GIDWANI. THE ASSESSEE ACQUIRED THE SAID PROPERTY VI DE AGREEMENT DATED 06/05/2010 ON PAYMENT OF CONSIDERATION OF RS. 9,11, 000/-. ON PURCHASE OF THE PROPERTY THE TENANCY RIGHT WAS CONVERTED INTO O WNERSHIP. THE TENANCY RIGHT WAS EXTINGUISHED ON 06/05/2010. THE ASSESSEE SOLD THE PROPERTY ON 12/10/2010 FOR A CONSIDERATION OF RS.88,00,000/-. T HE LD CIT(A) CONCLUDED THAT THE ASSESSEE HAS NOT SOLD THE TENANCY RIGHT IN THE PROPERTY, RATHER THE ASSESSEE BECOME OWNER OF THE PROPERTY ON PAYMENT OF CONSIDERATION ON 06/05/2010. THE ASSESSEE HAD TRANSFERRED THE PROPER TY AS HIS ABSOLUTE OWNER. THE ASSESSEE HELD THE ASSET AS OWNER OF THE PROPERT Y ONLY FOR FIVE MONTHS THUS GAIN ARISES ON SUCH SALE IS SHORT TERM CAPITAL GAIN (STCG). WE HAVE CONSIDERED THE VARIOUS DECISIONS CITED BY LD AR OF THE ASSESSEE. IN OUR VIEW NONE OF THE DECISION IS APPLICABLE ON THE FACTS OF THE PRESENT CASE AS THE RATIO DECIDED IN ALL THE CASE ARE AT VARIANCE. IN CASE OF CIT VS RAMA RANI KALIA (SUPRA) THE ASSESSEE WAS HIMSELF OWNER OF THE LEASE HOLD PROPERTY SINCE JULY 1984 WHICH WAS CONVERTED IN TO FREEHOLD IN MARCH 20 04, UNDER THE RULE BY COLLECTOR AND THUS WAS QUALIFIED FOR LTCG. IN MRS T AUQUEER FATEMA RIZVI VS ITO (SUPRA) THE PROPERTY/ FLAT WAS ALLOTTED IN L IEU OF SURRENDER OF TENANCY ITA N O.1125/M/2015- JAYANTILAL K. JAIN 5 IN 1982 AND WAS SOLD IN OCTOBER 2004. IN LATE MULYA B DASS VS ITO (SUPRA) THE ASSEST WAS ACQUIRED ON SURRENDER OF TEN ANCY IN THE YEAR 2005 AND SOLD WITHIN 36 MONTHS OF TAKING POSSESSION OF THE P ROPERTY, THE AO TREATED THE SAME AS STCG, THE AO TREATED THE COST OF ACQUIS ITION OF THE PROPERTY AS NIL. THE COORDINATE BENCH OF THE TRIBUNAL REMANDED THE MATTER TO THE FILE OF AO WITH THE DIRECTION TO CONSIDER THE COST OF ACQUI SITION AS PER MARKET VALUE; HOWEVER NO FINDING WAS GIVEN BY TRIBUNAL WIT H REGARD TO CLAIM OF LONG TERM OR SHORT TERM. IN AJIT M PENDURKAR VS ITO , THE ASSESSEE WAS TENANT IN THE PROPERTY FORM THE YEAR 1984. ON 04.0 3.2004 BY THE SCHEME OF THE GOVERNMENT THE ASSESSEE BECOME OWNER OF THE PRO PERTY ON PAYMENT OF CERTAIN AMOUNT. THE ASSESSEE SOLD THE PROPERTY ON 3 1.10.2004. THE ASSESSING OFFICER TREATED THE GAIN AS STCG AS PROPERTY WAS SO LD IN LESS THAN 36 MONTH. DURING THE APPEAL BEFORE THE TRIBUNAL THE ASSESSEE CONCEDED THAT THE GAIN COULD BE TREATED AS STCG. THUS, NONE OF THE DECISI ON RELIED BY THE LD AR FOR THE ASSESSEE IS HELPFUL TO THE ASSESSEE. IN OUR VIEW THE CONCLUSION OF THE LD CIT(A) IS BASED ON FACTUAL MATRIX AND WELL AS O N LEGAL ASPECT IS CORRECT. THUS, THE GROUND OF APPEAL RAISED BY THE ASSESSEE I S DISMISSED. 5. IN THE RESULT, APPEAL FILED BY ASSESSEE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST DAY OF JULY 2017. SD/- SD/- ( RAJENDRA ) (PAWAN SING H) ACCOUNTANT MEMBER JU DICIAL MEMBER MUMBAI; DATED 31/07/2017 ITA N O.1125/M/2015- JAYANTILAL K. JAIN 6 S.K.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT.REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY/